Pro-actively drafting cybersecurity policies and protocols is like doing a will for yourself, or an employee manual for your company. The thought process is that there is nothing imminently pressing that requires me to think about (or spend the time and money doing) either, and the problems fixed by both will “never happen to me.” But the world is changing rapidly, and the “it” in the “it will never happen to me” is all of a sudden happening to companies all around you when it comes to cyber risks, and data and privacy breaches.

According to a recent article in BusinessInsurance.com, “[m]ore than half of U.S. small and midsize businesses have experienced at least one data breach[.]” . . . The primary causes of the data breaches were employee or contractor errors, lost or stolen laptops, smart phones and storage media and procedural mistakes[.]” Want a more stark framing of the issue? The Los Angeles Times has reported that top U.S. intelligence officials claimed last month that “cyber-attacks and cyber-espionage pose a greater potential danger to U.S. national security than Al Qaeda and other militants that have dominated America’s global focus since Sept. 11, 2001[.]”

The loss from a data breach and crack in your company’s cybersecurity can range from millions of dollars in monetary loss, to the loss of critical, and proprietary, company information, to the reputational harm done to your business. The problem, and potential solutions, has gotten the attention of our government and corporate America. For example:

On March 6, 2013, the Congressional Homeland Security Committee held a hearing titled “[Department of Homeland Security] Cybersecurity: Roles and Responsibilities to Protect the Nation’s Critical Infrastructure.”

A recent survey released by AIG suggests that “[c]orporate executives these days are more concerned about cyber-attacks than they are about income loss or property damage[.]”

More than 140 businesses and governmental agencies, mostly in the United States, reported that their data had been hacked, with cybersecurity firm Mandiant surmising that the Chinese government has been behind some of the activity. The list of corporate entities hacked in 2013 alone according to news reports: Facebook, Microsoft, Apple, NBC, The New York Times, Burger King, Jeep. In many cases, employees of the hacked company will use a company computer to visit a legitimate website that has had its pages compromised by a hacker, which then allows the hacker to infiltrate the employer’s resources, information and database through the unknowing employee’s computer. If these companies can be hacked…

Employer Take Away: What should you as an employer take away from this development?

Three questions for you:

1. Have you reviewed your existing insurance coverage to make sure your company has sufficient coverage to protect against technology and cyber-privacy risks?

2. Have you developed adequate internal policies and protocols to address employee data disclosure, employees who bring their own devices into the workplace (“BYOD policies”), and whether and to what extent you are required to notify employees and others in the event of a data or privacy breach?

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

All the intelligence you need, in one easy email:

* With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name.